About Central Asia
Central Asia is a region of vast natural resources, strategic location, and diverse cultures. It comprises five countries: Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. According to the World Bank, Central Asia has a population of about 74 million people and a combined GDP of about $300 billion1.
Central Asia’s economic performance in 2020 was severely affected by the COVID-19 pandemic, which caused a sharp decline in external demand, remittances, tourism, and commodity prices. The region’s GDP contracted by 1.4 percent in 2020, the worst outcome since the 1990s2. The pandemic also exacerbated the region’s social and environmental challenges, such as poverty, inequality, unemployment, health, education, and climate change.
The economic outlook for Central Asia in 2021 and beyond is cautiously optimistic, as the region benefits from the global recovery, the gradual easing of lockdown measures, the rollout of vaccines, and the rebound in commodity prices. The World Bank projected that the region’s GDP will grow by 5.2 percent in 2021 and 4.4 percent in 2022. However, the recovery is expected to be uneven across countries, depending on the pace and scale of vaccination, the degree of policy support, and the speed of structural reforms.
The main risks and uncertainties facing Central Asia’s economic outlook include the potential resurgence of the pandemic and its variants, the slow progress of vaccination, the tightening of global financial conditions, the escalation of geopolitical tensions, and the persistence of domestic vulnerabilities. To mitigate these risks and foster a more resilient and inclusive growth, Central Asia needs to pursue a comprehensive policy agenda that includes the following elements3:
- Strengthening the health system and expanding the coverage and effectiveness of vaccination.
- Providing targeted and timely fiscal and monetary support to protect the most affected sectors and groups, while preserving fiscal and debt sustainability and financial stability.
- Enhancing regional cooperation and integration, especially in trade, investment, energy, transport, and digital connectivity.
- ccelerating structural reforms to improve the business environment, governance, transparency, competition, and diversification.
- nvesting in human capital, social protection, and green infrastructure to reduce poverty, inequality, and environmental degradation.
In conclusion, Central Asia is a region of both opportunities and challenges in the post-pandemic era. The region’s economic outlook depends largely on how it can cope with the health crisis, support the recovery, and implement the reforms. If Central Asia can overcome its obstacles and seize its opportunities, it can achieve a more prosperous, sustainable, and dynamic future.
